Event 3 of the 12Event Planning Model
Retirement Income & Long-Term Planning
The Long Goodbye to a Paycheque
Turn savings into a paycheque that lasts your whole retirement.
How TaxOnTax helps at this event
Retirement income planning: when to start CPP and OAS, how to draw on RRSPs and RRIFs, and your personal returns once you are retired.
Start with a free 15-minute call: (825) 977-7999 or send a request
Why this matters
For most of your life, the central money question is simple to state: how do I save more? Retirement swaps that question for a harder one: how do I turn what I’ve saved into a paycheque that lasts as long as I do?
Retirement income in Canada usually arrives from several places at once. There are the government pensions, one you contributed to through every working year, and another that simply arrives with age. There may be a workplace pension. And then there are your own savings: the retirement accounts that gave you a tax break going in, the tax-free accounts that give you a break coming out, and whatever sits in ordinary investments. Each of these sources behaves differently, is taxed differently, and starts at a different time.
What most Canadians get wrong
Retirement is where good savers make their most expensive mistakes, not from carelessness, but because the rules of the game changed and no one announced it. A handful of missteps appear again and again:
- They start the government pension on autopilot. Many people begin their contributory pension at the earliest possible moment simply because they can, without weighing whether waiting for a larger lifelong cheque would serve them better.
- They ignore the clawback tripwire. They take a big withdrawal in a single year (to buy a vehicle, help a child, or renovate) and lose part of their age-based pension; the purchase was fine, but lumping it into one year was the costly part.
- They draw their accounts in the wrong order. Spending the tax-free bucket first because it feels free sets up a later squeeze.
- They forget that couples are a team. Partners who each draw income separately, rather than sharing it, can overpay by thousands every year of retirement.
- They let the retirement account balloon. Deferring withdrawals to keep today’s tax low can end, once the rules force larger withdrawals, in a cluster of high-tax, clawback-triggering years.
- They treat retirement as a single decision instead of a long series of them. Health, markets, and rules change, and the retirees who do best revisit the plan each year and steer gently.
Your simple checklist
- Have you listed every retirement income source and when each one can begin?
- Have you made the pension-timing decision deliberately, rather than by default?
- Do you know which accounts you’ll draw from first, and why?
- Is your planned income smooth enough to stay below the clawback tripwires?
- If you have a partner, are you planning as one household rather than two?
- Do you have a tax-free reserve to lean on in high-spending years?
- Are you avoiding letting your retirement bucket grow until withdrawals are forced?
- Do you revisit the plan once a year, and adjust gently as life changes?
Questions to bring to your Discovery Meeting
- Should I start my Canada Pension Plan (CPP) retirement pension early, or delay it for a larger monthly payment?
- Will a large withdrawal this year trigger the Old Age Security (OAS) pension recovery tax, often called the clawback?
- Should I delay my Old Age Security (OAS) pension, and how much larger would each payment be if I wait?
- Can we use pension income splitting, or CPP pension sharing, to move retirement income to the lower-income spouse or common-law partner?
- When must my Registered Retirement Savings Plan (RRSP) become a Registered Retirement Income Fund (RRIF), and how will the minimum annual withdrawals affect my tax?
- Do I have a locked-in retirement account (LIRA) from an old job, and when must it become a life income fund (LIF) or similar plan?
- Is my workplace plan a defined benefit pension plan or a defined contribution pension plan, and what does that mean for my retirement income?
- As a business owner, how should my salary, my dividends, and the savings inside my company work together for retirement, and would an individual pension plan (IPP) suit me?
The TaxOnTax™ Insight
Saving builds the nest egg. It is the order, the timing, and the teamwork of spending it that decides how much you actually get to keep.
Excerpted from Chapter Three, “The Long Goodbye to a Paycheque”, of TaxOnTax™: The 12Event Planning Model, second edition, by Derik Godbout. Lightly trimmed for this page; the full chapter adds a worked example and the before-and-after steps.
Start with a free 15-minute call
Not sure whether the practice is the right fit? A free 15-minute call is the easiest first step. From there, a Discovery Meeting is a focused, one-hour working session, not a sales pitch. It is a paid session, and the fee is confirmed with you when you book.
Call (825) 977-7999 Request a call or meeting
Not sure which events apply to you? Take the 12Event Finder.
TaxOnTax™ Advisory Ltd. is a tax planning, accounting and executor advisory practice that also provides plain-language tax education. Derik Godbout is a PBA, CEA and DMA, Personal Tax Services Specialist™, not a CPA, lawyer, registered investment adviser, or licensed insurance professional. Nothing on this site constitutes personalized tax, legal, investment, or insurance advice. Always consult a qualified professional before acting on any information.